Leak 24 · Inventory & Working Capital - Inventory duplicated across branches

Five branches each hold three months of a slow item. The company holds fifteen months. Each branch manager is being sensible.

Diagnostic note. Symptoms, the records to bring, and a practical first check with your team.

What is it?

When every branch stocks every item, safety stock multiplies. For fast items that may be right. For slow and mid-velocity items, one or two stocking locations with next-day transfer would serve customers just as well with a fraction of the inventory. Branch-level replenishment makes the decision locally, and nobody sees the total.

Family
Inventory & Working Capital
Primary owner
Inventory Manager
Secondary owners
Branch Managers, CFO
Primary impact
Working capital
Typical data source
ERP inventory by branch, demand by branch
Detection difficulty
30-day measurability

Ask yourself

For slow items, do you know how many branches stock them, and whether one central location would serve the same customers?

Yes, partially, no, or don’t know. “Don’t know” is the most useful answer, because it points at the test below.

What does it look like?

Look for these patterns, then use the check below to trace the issue in your own records.

  • Items stocked in every branch with low demand in most of them.
  • Total company months of supply far above any branch’s months of supply.
  • Branches unaware that another branch has excess of what they are ordering.

What data do I need?

The minimum viable set. Most of it is already in your ERP.

Field
On-hand by item and branch
Demand by item and branch for 12 months
Transfer cost and lead time between branches

The initial check

Start with a small sample. Ask the person who owns the records to gather the exports and agreements, then work through these steps together.

  1. 1Export on-hand and 12-month demand by item and branch.
  2. 2For items stocked in three or more branches, calculate company-wide months of supply.
  3. 3Sum the value of items where company months of supply exceeds 12 and no single branch sells more than a few units a month.
Duplication excess = Σ (company on-hand − demand-justified central stock) × unit cost, for multi-branch slow items

Then ask one question: Which of these items could be stocked in one place with next-day transfer and no customer noticing?

How much could it be costing us?

A conservative range, not a headline. The goal is a number management can trust enough to investigate.

Duplication excess value × carrying cost rate, net of additional transfer cost

Common root causes

Fixes fall into three layers. Not every problem needs software, and almost none needs AI first.

Process
Replenishment decided branch by branch with no network view.
Data
No stocking-location strategy recorded on the item.
Technology
The ERP replenishes each branch independently and does not check other branches’ stock first.

What should we do?

Start with the simplest intervention that could solve it. Move down the list only if the one above is not enough.

  1. Level 1

    Visibility

    A network-level months-of-supply report by item.

  2. Level 2

    Policy

    Stocking-location rules by item class: which items every branch stocks and which are central.

  3. Level 3

    Workflow

    Replenishment checks other branches for excess before raising a supplier PO and suggests a transfer instead.

Where AI helps

  • Recommending stocking locations from customer geography and order patterns.

Where AI probably doesn’t

A network report and a stocking policy get most of the value.

Before you call it a leak

  • Counter customers expect stock on the shelf. Central stocking works for delivered and planned orders, not for walk-ins.

Think this might be happening in your business?

Turn the finding into a next step.

If the numbers say there is something there, send us what you found and we will help you decide whether it is worth a full investigation. No transaction files needed for that conversation.

Let’s start with one thing.

Give your team more time for the work that needs them.

Show us the quoting, order-entry, or follow-up work that keeps piling up. We’ll map it with you and find a practical place to start.

Start with a free workflow conversation with Alex.